Finances for a house, which option?

[Autumnall]

I know this is more a money question but looking for traffic!

I’m 32 and should have 130k deposit, assuming I sell my current house for 250k, which is apparently doable as far as estate agents are concerned.

When I bought that house I only had 30k deposit.

My question is this... do I buy somewhere with a minimal mortgage of say 70k or do I borrow the most I can get from the bank and buy a place for more like 380k with a bigger mortgage?

I have more income now than when I bought the first house and I’ve been given mixed views on this. Some say take what the bank will offer as they won’t offer as much again the older you get/if my salary decreases (possible if I have to change jobs although not worried about actual repayments, I would still meet those). Other people say just get a 50% mortgage and reduce your repayments while owning more of the property outright, so looking at maybe 130k equity and 130k mortgage or less. People also say the larger you buy the more money you are likely to make and you can always downsize. I’m also aware the interest rates are low etc now.

What’s the best option do you think?

There are so many other things to consider. Are you married? Are you planning on having a family? Is your job secure? Do you need a bigger home? What are your medium and long term plans? Can you afford to pay your mortgage if you fall ill or interest rates increase? Can you afford the maintenance on a bigger home? Why do you want to move?
I think the midway point - borrow more, but not so much you are at your maximum. You may have unexpected expenses - need a new car, or a new roof for example. And there's no point buying a much bigger place if it's just you, though a property in a better area might be a good idea.
Buying a home is not just a financial decision.

Interest rates are so low at the moment so you will get a good deal, make sure you can afford it though after the fixed term.

Stamp duty is also a great incentive at the moment.

If you don’t push yourself will you want a bigger house in a few years anyway and then you would have to pay stamp duty?

Is it just for you? I think it's unwise to buy a much larger house than you need to be honest,. To get the maximum mortgage possible for the reason that your future earnings might decrease doesn't make sense at all. The more expensive the property the higher the council tax and related bills , it really doesn't make sense as an investment. Surely you could consider a second property if you're doing it for investment purposes? What's your intention? To be happy?, to make money? Is it a home or an investment, what's the leading factor?

Also, property on the longer term will always make money but on the shorter term might reduce in value. I'm selling/buying next year and I wonder how covid will have impacted on house prices by then. I'm no expert and I haven't did any up to date reading on property prices and I'm not going to share my thoughts on that but I think property could remain at least stay the same for a while due to the impact on that.

Thanks. I hadn’t considered stamp duty coming back again! I am tempted to max out really because it would be easier to downsize. That said you can get a pretty large place for 350 where I’m looking, but mostly cottages with large garden.

Not worried about repayments as even borrowing the max would be cheaper than rent in the same area. I guess I wondered if it was safer to own most of your house which I could feasibly do now. But I also sense I wouldn’t borrow what they’re offering again as my pay could easily be cut soon and god knows how long for after this year

I'd say make sure the mortgage repayments are less than 15% of your take home pay. I'd also think about why you want a bigger house and whether you need it. Imagine being mortgage free in 5 years as you went for a mainly cash purchase. Freedom from payments and gives you the ability to save towards retirement/ kids education and live without being indebted to the bank...

Meant to say 25% of your take home pay as a max

As a londoner im absolutely crying at these prices :*(

I'd go in the middle..so if you have kids and reduce hours or if life throws another curve ball you have some buffer. Big houses are expensive to maintain

Take whatever estate agents say about the value of your house with a pinch of salt, especially in current times.

If you’re going to push the budget then I’d be looking at location rather than size, unless you think/know you might be needing the extra room (kids or running a business from home) soon.

But, unless you’re in a very stable / bombproof profession, it’s probably not the time to be stretching IMO. Have you got a good cushion in case you’re made redundant? What’s your fallback position if the economy double dips and the property bubble bursts?

as my pay could easily be cut soon and god knows how long for after this year

If your pay could easily be cut, then don't stretch to your limit, otherwise you could end up in the shit. Don't be greedy, just buy what you need and can afford without stress.